Financial benefits in digital health projects

Digital health projects are often focussed on increasing the safety and quality of care delivered to patients. For larger scale projects, occasionally direct financial benefits are identified. These benefits may include examples such as:

• Saving Full Time Equivalent (FTE) wages

• Retiring old and un-supported software systems

• Rationalising on-site physical data storage

FTE savings are primarily comprised of administrative and information technology staff. It is uncommon for digital health projects to reduce the number of clinical FTE. Digital health may enhance the efficiency of clinicians, but time saved is usually allocated to other tasks. For example, an Electronic Medical Record may save a doctor from searching for test results through an extensive paper record. However, no one is going to suggest that we can take those few minutes away from the doctor and ‘cash them in’, instead that time will be spent on other tasks.

When clinicians can use their time in a better way, the benefit messages may include:

• Enhanced ability to focus on other valued activities

• Support clinicians to work to the top of their scope of practice

Another way to measure the benefit of saving clinician time is by analysing the amount of money spent on overtime and on agency staff. Efficiency gains delivered by digital health can reduce the outlay on these expenses, however, the analysis must account for changes in underlying activity.

Another potential financial benefit relates to increasing the activity of the health organisation. This may be specified as:

• Reduced length of stay (LOS)

• Improved throughput

These benefits are potentially revenue generating because if the average time a patient stays in hospital is reduced, turnover can be increased, and more activity will be reimbursed. However, this analysis must be carefully considered. The actual extent to which these benefits will increase revenue is dependent upon enabling more episodes of care. The number of episodes of care delivered in a financial year is set by contracts with the Department of Health of each State. If activity surpasses the agreed contract, the reimbursement for these extra patients is drastically reduced. As a result, these extra patients have a net cost and as a result will inhibit the total quantum of revenue generated.

Another benefit of reduced LOS is the increased potential to avoid negative outcomes such as falls and Hospital Acquired Conditions (HAC). Not only is this better for the patient, hospitals also benefit by avoiding the financial penalties imposed by State Governments.

The delivery of virtual care or ‘hospital in the home’ is often positioned as a source of financial benefits by enabling new and more efficient models of care. Again, the funding of these new models needs to be explored more closely, under the 2020-25 National Health Reform Agreement, the Independent Hospital Pricing Authority must develop a funding methodology so that the Commonwealth can enter into bilateral agreements with states and territories to trial innovative funding models.